Employee clothing discounts are now a taxable benefit

[suntan]

Yes fuckers, the Libs need money and the guise of "tax fairness" is now being thrown out the window.

Employee clothing discounts are now a taxable benefit.

Money money money!

Behind the paywall, luckily I'm baller.

Never trust a man named Zoltan.

https://beta.theglobeandmail.com/news/politics/cra-to-begin-taxing-employee-discounts/article36523730/


The sales clerk who gets a 25-per-cent discount on the shoes sold at her store is facing a new bill: The Canada Revenue Agency has indicated that employee discounts will now be taxed.

Companies have long offered discounts to their staff, but as a long as items weren't sold to them below cost, neither employer nor employee had to count them as taxable benefits. The CRA's employer's guide, on the agency's website, said so.

But the CRA has issued a more recent tax "folio" indicating that employee discounts are to be considered taxable benefits, and part of their income.

It's a reinterpretation that prompted disbelief. "Why would the government want to abandon long-standing practice to start taxing a store employee for a 20-per-cent discount on a pair of jeans?" Retail Council of Canada vice-president Karl Littler said at a hearing of the Commons finance committee on Sept. 27.

For months, employer organizations thought that the interpretation in the new tax folio, which indicate employee discounts are taxable benefits, might simply be a mistake. After all, it contradicted CRA's employer guide, which has been in use for years and remains on the agency's website. The employer guide said employee discounts are "not usually considered a taxable benefit," while the new folio indicates "the value of the discount is generally included in the employee's income."

But a spokesperson for the CRA, Zoltan Csepregi, told The Globe and Mail in an e-mail that it is the new folio that is "correct and represents CRA's interpretation of the law." He said CRA's employers' guide and its websites – which had long indicated that employee discounts don't need to be counted up as taxable benefits – will be updated "to ensure that the practical guidance is consistent with the folio."

At a time when the Liberal government is facing controversy over changes to the taxation of small business, arguing that they are closing loopholes for the affluent to be fair to the middle class, starting to tax employee discounts seems to clash with the political message.

Employers discounts typically add up to relatively small sums for the individual who receives them, and they tend to be in jobs that pay relatively modest wages. Mr. Littler told the Commons committee the rule change would affect many of the country's two million retail-sector employees, and possibly hundreds of thousands in other sectors.

For employers, he warned, it could mean an "administrative nightmare." If employee discounts are taxable benefits, then presumably employers would be expected to track them, and tally their value each time an employee buys a discounted item, recording the annual total on their T4 – perhaps encouraging them to drop the discounts to avoid the hassle.

"I can't help but shake my head at this one, to be honest with you," Liberal MP Wayne Easter, chair of the Commons finance committee meeting, told Mr. Littler at the hearing.

The Canada Revenue Agency said in a statement e-mailed to The Globe that they don't expect the change in their interpretation to bring about a significant change in the number of employee discounts that are reported as taxable benefits. They pointed to an exception that stipulates that if an employer has a sale where "that same discount is also available to the general public," then the employee discount won't be considered taxable income.

But employers' groups say that that seems like a narrow loophole, and they are confused that the CRA seems to be suggesting it can be applied to most employee discounts. Rachel de Grace of the Canadian Payroll Association, an employers' organization that deals with payroll matters, said it's not clear how CRA expects the new policy to be applied.

Mr. Easter, the chair of the Commons finance committee, said he thinks the CRA should reconsider its new approach. "They had better," he said in an interview.

He said it appears that the political level of government – cabinet ministers and their political staff – were not aware that officials in the department had changed the interpretation of the law.

Most of the people who benefit from employee discounts are not high-income earners, he said.

"And how are you going to track something like that?" he said. "C'mon. Let's have a little common sense."

[Maxx Mazda]

So, save 10% on a pair of shoes, only to pay an extra 15% tax... seems legit.

Pride minister shitstin strikes again.

[TomcoPDR]

:thumbsdow

[speedog]

So the employer has to show these discounts as lost revenue now, report that on the employee's pay stub/T4 as a taxable benefit and deduct tax/EI/CPP plus on their own side report the matching EI/CPP amounts? Holy crap, what a pain in the ass that'll be especially when the sales systems and payroll systems in most companies are not integrated.

It's getting to the point where it'll be simpler and easier for companies to have every employee become a subcontractor.

[Darkane]

First thing that came to my mind is Ford employee pricing commercials.

Really Justine? You dick.

[schocker]

Wow. They are just finding extra revenue everywhere to help the middle class now, aren't they.

[Twin_Cam_Turbo]

So how does this apply for someone like an airline employee who gets free/discounted flights/hotels/rental cars as a benefit?

[Zhariak]

So how does this apply for someone like an airline employee who gets free/discounted flights/hotels/rental cars as a benefit?

More TAX TAX TAX! :barf:

[ExtraSlow]

The best way to help the average middle class family is to text everything more and more. FACT!

[The Cosworth]

So I imagine this means the Marks Work Warehouse discount cards become impossible to enforce and tax meaning they'll probably disappear? I don't think that Marks tells my work when I go (or don't) use the card.

[TomcoPDR]

The best way to help the average middle class family is to text everything more and more. FACT!

Justin will help by texting you his selfies

[rage2]

So how does this apply for someone like an airline employee who gets free/discounted flights/hotels/rental cars as a benefit?
The article isn’t specific to clothing discounts. This applies to ALL employee discounts. Employee pricing for TVs at Visions? Taxable. Ford employee pricing? Taxable. Free flights on standby? Taxable. Even staff meal discounts at McDonalds, the only real perk of working there, will be taxable lol.

[JRSC00LUDE]

And yet it was Harper who ruined the Country and thrust it into debt so really this is his fault. We all have to pull our weight.

[ExtraSlow]

And yet it was Harper who ruined the Country and thrust it into debt so really this is his fault. We all have to pull our weight, comrades.ftfy

[Masked Bandit]

So how does this apply for someone like an airline employee who gets free/discounted flights/hotels/rental cars as a benefit?

Let's assume the normal fare for a flight is $500 but because you're a WestJet employee you only pay $100 (plus taxes). The $400 discount is now shown as a taxable benefit and you pay based on what your personal income tax rate would be. If you're at a 25% tax bracket then that means you're out of pocket $100 so that $400 discount your employer just gave you is really only a $300 savings.

Fuckers.

[ExtraSlow]

the paperwork involved in administering these programs going forward will mean it's just more practical to remove all types of employee discounts altogether.

[Sugarphreak]

...

[JRSC00LUDE]

Don't they have better things to do than pick on the lowest income bracket working class? Seriously, wtf

It's tax fairness, dumb dumb. These cheats should PAY.

[Disoblige]

So what if they have an employee pricing sale? Do customers have to pay the tax on the saved amount? Why not just tax Canadians on full price of sale price items across the board then, lol.

Don't they have better things to do than pick on the lowest income bracket working class? Seriously, wtf
Did you read the article? :P


They pointed to an exception that stipulates that if an employer has a sale where "that same discount is also available to the general public," then the employee discount won't be considered taxable income.

[Sugarphreak]

...

[max_boost]

This is insane. How are they gonna track this?

[revelations]

Just more black market.

Well done to those who elected the fliberals (not that I was a huge Harper fan).

This is just the start, folks. More socialism/Quebec pandering coming no doubt.

[sabad66]

this is a pretty ridiculous to start taxing. It will be more paperwork than it's worth to manage, so i imagine companies will just cancel these perks.

[rage2]

Let's assume the normal fare for a flight is $500 but because you're a WestJet employee you only pay $100 (plus taxes). The $400 discount is now shown as a taxable benefit and you pay based on what your personal income tax rate would be. If you're at a 25% tax bracket then that means you're out of pocket $100 so that $400 discount your employer just gave you is really only a $300 savings.

Fuckers.
It also means if you didn't setup your withholdings to account for that at year end, you'll be facing a $100 bill for this one discount alone.

So I buy a lot of stuff through friends on their employee discounts. Because of this, they'll be facing a tax liability for helping me out.

[austic]

This is funny, most of the people with the retail type jobs wanted the liberals to tax the rich and now they are getting screwed too.... I could see this being huge for the airline industry as I have friends who fly non stop on weekends using their standby.

[ExtraSlow]

If your village has five farmers and only one has an oxen to pull his plow while the rest must rely on thier stout wives, it would be impractical to give oxen to the other four. Very practical and fair to slaughter that one oxen and put everyone on an equal footing.

[Twin_Cam_Turbo]

Let's assume the normal fare for a flight is $500 but because you're a WestJet employee you only pay $100 (plus taxes). The $400 discount is now shown as a taxable benefit and you pay based on what your personal income tax rate would be. If you're at a 25% tax bracket then that means you're out of pocket $100 so that $400 discount your employer just gave you is really only a $300 savings.

Fuckers.

Thanks Bill. I was a little unclear I’m actually more curious how they come up with a “standard price” when things like flight prices change? It would seemingly be kinda hard to track?

[Lanks]

Also the employees would usually be flying standby. It's hard to assign a value for a seat that would otherwise be empty. My understanding is this is why we have not been taxed on standby travel up to now.

[Tik-Tok]

Thanks Bill. I was a little unclear I’m actually more curious how they come up with a “standard price” when things like flight prices change? It would seemingly be kinda hard to track?

From how I'm reading it myself, so long as regular customers have access to the same price at some point in the year, then they can give the same discount any time of the year to the employee.

I don't think this whole thing is going to stick though. They're already reviewing it after the announcement yesterday.

[Sugarphreak]

...

[zhao]

This is a enforcement nightmare for those who wont follow the law, and a paperwork nightmare for those that do follow it. Plus the whole grey area where if I buy something with my business' discount from a supplier, or if I sell something to myself at cost, because I ate the cost of parts for a customer job once that year. What a ill conceived idea...

Also, whats next? taxing business lunches?

[spikerS]

TELUS employees used to get an employee rate plan as "ambassadors" of the service. Paid $15 a month for basically unlimited Canadian calling and texting, and like 2gb of data.

Then, it all changed, you got 40% off any in market rate plan, but you got taxed on it.

They also have a rewards program. You are given "points" which you can then redeem for gifts from a catalog. Toasters, movie passes, golf clubs...whatever. Lets say you redeem your points for $100 gift card. You get taxed on that $100 gift card, but TELUS would pay that tax, so, on the $100 card there would be a $30 tax, but then that $30 to cover the taxes in a taxible benefit too, so, it increases to $39, and keeps going up until it basically zeros out. It's fucking comical.

[speedog]

TELUS employees used to get an employee rate plan as "ambassadors" of the service. Paid $15 a month for basically unlimited Canadian calling and texting, and like 2gb of data.

Then, it all changed, you got 40% off any in market rate plan, but you got taxed on it.

They also have a rewards program. You are given "points" which you can then redeem for gifts from a catalog. Toasters, movie passes, golf clubs...whatever. Lets say you redeem your points for $100 gift card. You get taxed on that $100 gift card, but TELUS would pay that tax, so, on the $100 card there would be a $30 tax, but then that $30 to cover the taxes in a taxible benefit too, so, it increases to $39, and keeps going up until it basically zeros out. It's fucking comical.

Ya gots to start collecting a TELUS pension, then there isn't any tax deduction for the 40% employee discount. Trudope will probably take care of that though.

[rage2]

They also have a rewards program. You are given "points" which you can then redeem for gifts from a catalog. Toasters, movie passes, golf clubs...whatever. Lets say you redeem your points for $100 gift card. You get taxed on that $100 gift card, but TELUS would pay that tax, so, on the $100 card there would be a $30 tax, but then that $30 to cover the taxes in a taxible benefit too, so, it increases to $39, and keeps going up until it basically zeros out. It's fucking comical.
We do the same thing for employee rewards. The big ones are the 10 year gifts because they’re massive, and ya the tax on it that the company calculates and pays for is hilarious math.

[googe]

Does this actually have anything to do with Trudeau? It's not like he can tell the CRA what to do, right? Is this the CRA's own doing?

[Buster]

Does this actually have anything to do with Trudeau? It's not like he can tell the CRA what to do, right? Is this the CRA's own doing?

The CRA reports to the minister of Revenue...who reports to Trudeau. Who reports to Bert and Ernie, as far as I can tell.

[rage2]

Trudeau boosted CRA budget by a couple hundred million dollars in last years budget with a mandate to find more revenue with a focus on tax cheating, so yes this is directly related.

[Zhariak]

The CRA reports to the minister of Revenue...who reports to Trudeau. Who reports to Bert and Ernie, as far as I can tell.

Hahaha :)

[googe]

It's quite a logical leap to go from "increased funding for a government agency to find cheaters" to "staff discounts are now taxable". I mean, what PM is going to have any clue about how that works? It was probably delegated 3 times to someone in the weeds before that decision was made. Someone now had a mandate to find more revenue, and they aren't very good at their job, got desperate, and came up with this as a way to meet that.

In all likelihood he had nothing to do with it, and when he heard that this was how they planned to find cheaters, he probably had the same reaction that we do, and likely told them to chill out on it and go work something else out.

Thanks Obama

[mr2mike]

Who's feeding him these ideas? A 1st year in industry business grad?!
The amount of govt jobs this would add is large, just to verify and track all these taxable benefits over at the CRA.
End goal, have everyone being a govt employee?

[rage2]

It's quite a logical leap to go from "increased funding for a government agency to find cheaters" to "staff discounts are now taxable". I mean, what PM is going to have any clue about how that works? It was probably delegated 3 times to someone in the weeds before that decision was made. Someone now had a mandate to find more revenue, and they aren't very good at their job, got desperate, and came up with this as a way to meet that.

In all likelihood he had nothing to do with it, and when he heard that this was how they planned to find cheaters, he probably had the same reaction that we do, and likely told them to chill out on it and go work something else out.

Thanks Obama
Well someone has to be accountable right? It's like saying we shouldn't blame Richard Smith because Joe Blow IT forgot to patch Apache Struts.

Also, it's way more entertaining to blame Trudeau than to blame some poor CRA schmuck. :rofl:

[Tik-Tok]

Who's feeding him these ideas?

Who's "him"? You mean Lebouthillier? She's a woman, just FYI, but yeah, I can just imagine some 1st year grad getting all excited that they found a new source for taxation, and running into their bosses office with it, lol.

[adam c]

Who's "him"? You mean Lebouthillier? She's a woman, just FYI, but yeah, I can just imagine some 1st year grad getting all excited that they found a new source for taxation, and running into their bosses office with it, lol.

The fact the boss didn't say this is a dumb idea and strike it down just shows how the government operates

[Tik-Tok]

The fact the boss didn't say this is a dumb idea and strike it down just shows how the government operates

Except they are in the middle of reviewing to strike it down. You think bureaucracy takes a day?

[max_boost]

bwahaha now they going back on it.

No shit. Common sense perspective, this is a stupid idea. :dunno:

[88CRX]

Except they are in the middle of reviewing to strike it down. You think bureaucracy takes a day?

It should have been struck down the second it was suggested. End of story. How many hours (and tax $$'s) were spent total on this stupid idea? Ridiculous.

Government gonna government.

[suntan]

Except they are in the middle of reviewing to strike it down. You think bureaucracy takes a day?

The interpretation made it all the way to folio, she either doesn't review what's written in the folios but approved them, or some bureaucrat unilaterally published one. Either one is a grievous gov't mistake.

Believe it or not, Ministers actually have to do bureaucratic work. Shocking I know.

https://www.canada.ca/en/revenue-agency/services/tax/technical-information/income-tax.html

[The Cosworth]

It's quite a logical leap to go from "increased funding for a government agency to find cheaters" to "staff discounts are now taxable". I mean, what PM is going to have any clue about how that works? It was probably delegated 3 times to someone in the weeds before that decision was made. Someone now had a mandate to find more revenue, and they aren't very good at their job, got desperate, and came up with this as a way to meet that.

In all likelihood he had nothing to do with it, and when he heard that this was how they planned to find cheaters, he probably had the same reaction that we do, and likely told them to chill out on it and go work something else out.

Thanks Obama


Who's feeding him these ideas? A 1st year in industry business grad?!
The amount of govt jobs this would add is large, just to verify and track all these taxable benefits over at the CRA.
End goal, have everyone being a govt employee?

Yes, this is basically how government works. I just imagine some low level bureaucrat at CRA who has been there 7-12 years and figured it was easier to just extend subsection [3] paragraph [a] line [iii] of some code for him, so he did and that is the idea he floated. Either his was the best idea, or the only idea, so his bosses took it. So he floated it not expecting them to take it. Now his bosses are giving him shit for his stupid idea and making them all look bad.

[suntan]

Yeah the low level bureaucrat used MS FrontPage and edited the text herself on the CRA website.

[ExtraSlow]

That would explain a lot.